Report says hospital charity care and bad debt increased 10% in 2011

An organization representing Iowa’s 188 hospitals is reporting they’re providing more than a billion dollars in uncompensated health care. The Iowa Hospital Association states charity care and bad debt increased $97 million dollars last year or about 10-percent more than in 2011.

The association’s CEO, Kirk Norris, says hospitals are being squeezed by increasing charity care cases and by Medicare and Medicaid government programs which don’t fully reimburse hospitals for health care’s actual costs. “It was an amount that was paid by the government for that service. That is not the same as saying that is the amount that it cost the institution to provide that,” Norris said.

“In other words, if you were to factor out the labor costs, the supply costs, the technology costs, the infrastructure costs, that it takes to deliver a particular service, the amount that either one of those programs is paying for that service does not cover that cost on a cost-accounting basis.”

Norris says that forces hospitals to be transfer agents — passing those losses to other payers. “Largely, it is private insurance companies, or employers, that provide insurance to folks like you and me, that cost is transferred to them. But, by and large, it’s a cost that’s transferred. It’s called a cost shift from those payers who do not pay their full share,” Norris explained.

Iowa hospitals employ about 70,000 people, according to Norris, adding more than $6 billion to the state’s economy.